Cutting costs when capital is scarce
Two years ago, Annapolis native Yael Krigman quit her job as an associate at District-based law firm White & Case to pursue her real passion — baking.
Krigman specializes in “cake pops” — cake bites on a stick, dipped in icing or chocolate. Eventually, she hopes to open a brick-and-mortar “cakepoppery” to sell her signature treat.
She did not jump into entrepreneurship without testing the waters first. While working at White & Case, Krigman had been selling baked goods online as a side business, but left when she realized she preferred the baking to her full-time job. Krigman knew opening a business as the country emerged from a recession wouldn’t be easy, but she said she didn’t want to put her dreams on hold.
Since she left the firm, “Baked by Yael” is Krigman’s only source of income as she pays off law school loans and a mortgage. She has catered for Marriott Hotels, local Google events and events organized by her alma mater, the University of Pennsylvania, but is looking to expand beyond corporate events and parties.
Krigman said a storefront should make it possible for customers to make impulse purchases. “I’ll have a much broader audience,” she said, noting that the bulk of her non-corporate customers are local mothers buying cake pops for children’s parties.
But she has been struggling to secure sufficient capital for the store, looking to local angel investors for the additional $225,000 she thinks she will need. She has not applied for a small-business loan because she suspects she won’t be able to fulfill the personal guarantees required.
“The economic uncertainty is most palpable as it relates to raising start-up capital,” Krigman said. “Uncertainty makes people think a lot harder before they part with their money.”
While she approaches investors and shops around her business plan, Krigman has had to get creative to keep her costs low. Instead of working out of a commercial kitchen, the Cleveland Park resident has been using the kitchen at her synagogue several days a week for free.
Krigman also recently scored some free consulting work by offering her business as a case study for MBA students at American University.
“They spent the entire semester analyzing my business and made recommendations for how to grow my business moving forward. If I’d have to pay for it, I would never have been able to afford it,” she said.
Until Krigman opens her store, she’s holding off on all major business decisions — for example, hiring the eight employees she eventually hopes will help her bake and manage the store.
“So long as I don’t have the start-up capital I need, there’s so much uncertainty moving forward, I’m not sure if I’m ready to invest in employees at this point.”
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